Corn battles back to end week

Front-month CBOT December corn futures shed 4-3/4 cents this week to close at 525-3/4. After a rough start to the week following the October WASDE report, front-month corn futures rallied to end the week, closing only slightly lower. While the market remains in a downtrend, this late-week action was promising. In their weekly update, the Buenos Aires Grain Exchange indicated that corn planting had reached 23.2% complete as of October 14th, this was a 2.1% jump from last week. Only 30% of Brazil’s total 2021/22 corn crop will be planted in the coming weeks. The bulk of the crop, about 70%, will be planted following soybean harvest in early 2022.

Ethanol production for the week ending October 8th averaged 1.032 million barrels per day. This was up 5.52% versus last week and over 10% versus last year and came in well above trade expectations. Given the sharp jump in production and a lower ethanol stocks number suggests strong usage as ethanol production margins remain very profitable.

Soybeans close above $12 after bearish WASDE report

Front-month CBOT November soybean futures shed 25-1/4 cents this week to close at 1217-3/4. Tuesday’s USDA supply and demand numbers were bearish versus expectations, but late-week strength managed to push prices back above the $12 level. China and unknown destinations bought 31.4 million bushels of US soybean on Friday morning according to the USDA. The recent dip in prices has brought buying interest from major soybean importers. Soybean exports were strong this week but still remain below the 5-year average and the pace needed to meet USDA projections.

The 2021/22 Brazilian soybean planting was estimated at 10% complete as of about a week ago, versus just 3% last year and 9% on average. Mato Grosso, Brazil’s largest soybean producing state, was estimated to be 20% complete with soybean planting. The 2021/22 Brazilian soybean acreage is estimated at 40.5 million hectares (100.0 million acres) which is an increase of nearly 5% compared to last year. The latest ECMWF (European Centre for Medium-Range Weather Forecasts) forecast for the months of November-February in Brazil shows relatively favorable conditions for crops in the major growing areas, with near-normal rainfall in Mato Grosso and above normal rainfall in northeastern Brazil. The forecast shows the potential for dryness in southern Brazil, which could lead to crop stress.

CBOT wheat unchanged this week

December CBOT wheat prices were unchanged this week to close at 734 once again this week. December KC wheat futures added 6-1/4 cents this week to close at 743-3/4. December spring wheat futures added 22-1/4 cents this week to close at 968-3/4. Winter wheat seeding is nearing completion as dryness continues to grip much of the central and southern Plains. While it may be early to sound the alarm on US production issues, poor emergence and stands are starting to be reported in parts of the Plains. Another week of new highs blessed spring wheat charts this week as this year’s drought continues to influence prices. Spring wheat futures traded to a high of $9.80 per bushel this week, the last time spring wheat futures topped $10 per bushel was July of 2012. Spring wheat will need help from other commodities to push higher in the weeks to come. Seasonally, cash spring wheat prices trend lower from early November until the end of the year. Get current with all wheat recommendations if not already.

Solid Week for Milk Prices

The November Class III contract finished the week 56 cents higher at $19.28, $2.53 off its pivot low from September 20th. The block/barrel average has pushed back under the $1.80/lb mark, just beneath its 2021 high from May. Resistance at that line has held with spot cheese, down 1.5 cents on the week. Barrels have pushed a penny above block prices, an inversion that historically does not last for long. Whey prices continue to shine with another positive weekly close, finishing $0.0075 higher at $0.6025/lb to string together six higher weeks in a row. Whether prices can break into the $20.00 range is likely hinging on whether cheese prices can break out to fresh 2021 highs, unless spillover strength from Class IV prices provides enough support. Regardless, some risk management is warranted at these levels with a mind to the remainder of Q4 and the beginning of 2022.

Class IV prices broke out of their long-term sideways range early in the month and were able to find some follow-through this week with the November contract closing up 47 cents at $18.07. This is the first time in seven years the second month has traded with an $18.00 handle and still leaves potential for additional technical follow-through. Fundamentally, spot butter has now hung between $1.70 and $1.80/lb for two months compared to its 2021 high close of $1.88/lb. During the seven-year span where Class IV futures failed to manage a breakout, butter spent a lot of time in the $2.00+ range, leaving room for further optimism for milk prices if butter can break higher. Powder prices tacked on another 7.25 cents this week to move to $1.5325/lb, their highest level since 2014, and have aided in getting Class IV prices to some attractive levels.